Bòsnia i Hercegovina flag Bòsnia i Hercegovina: Visió econòmica i política

El context econòmic de Bòsnia i Hercegovina

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Nowadays, Bosnia and Herzegovina is considered an upper-middle-income country, achieving great results since 1995, year in which an inter-ethnic conflict - that destroyed much of the Bosnian economy and infrastructure, increased unemployment and decreased production - came to an end. However, the economy still lacks competitiveness and the government launched a structural reforms program for 2019-2021 to boost private investments and exports. Following a recession caused by the outbreak of the COVID-19 pandemic, the economy grew an estimated 2.8% in 2021, mostly driven by household consumption (accounting for around three-quarters of GDP). The IMF forecasts a GDP growth of 3.3% this year, followed by 3% in 2023, although uncertainty persists due to the weak vaccination rollout and political instability.

The general government balance was negative by 2.1% of GDP in 2021; however, the public accounts of the country's three constituent entities (Central State, Federation of Bosnia and Herzegovina and Republika Srpska) are expected to improve markedly in 2022 thanks to a marked economic recovery. Albeit relatively low, the debt-to-GDP ratio increased from a pre-pandemic level of 32.5% to 38.9% in 2021. The ratio is forecast to remain somewhat stable in the short term (at 40.1% in 2023 – IMF). The government does not have access to markets, but it receives financing from several multilateral institutions, including the EBRD (around EUR 105 million in 2021 in partnership with the private sector) and the EU Commission (EUR 250 million in June and EUR 80.5 million in September 2021). Higher energy prices prompted an increase in inflation, which spiked to 1.8% in 2021, the same level it is expected to attain this year (IMF).

Corruption and the high level of unemployment are major hurdles to the country's economic development. The unemployment rate stood at 15.8% in 2021 and is expected to remain stable over the forecast horizon. Addressing bottlenecks causing persistent long-term unemployment, such as enhancing formal labour market participation (especially for women) and reducing skills mismatches for youth will be key. The country’s GDP per capita (PPP) is low, estimated at USD 15,935 in 2021 by the IMF.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 20.2019.79e21.6923.0124.52
GDP (Constant Prices, Annual % Change) 2.8-4.32.83.33.0
GDP per Capita (USD) 6,1206,0356,6487,0797,568
General Government Balance (in % of GDP) 1.4-2.8-2.1-0.8-0.4
General Government Gross Debt (in % of GDP) 32.536.738.940.040.1
Inflation Rate (%) 0.6-1.1e1.81.81.7
Unemployment Rate (% of the Labour Force) 15.715.9e15.815.715.6
Current Account (billions USD) -0.62-0.64-0.84-0.79-0.81
Current Account (in % of GDP) -3.1-3.2e-3.9-3.5-3.3

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector accounts for 6.2% of GDP and nearly 18 % of total employment (World Bank, latest data available), with corn, wheat, barley, fruits, vegetables, livestock and poultry being the main agriculture products. The country has approximately 1.6 million hectares of land suitable for cultivation, and most of the farms are small in size and family-owned. Bosnia and Herzegovina is still a net food importer.

The industry sector represents 23.9% of the country’s GDP, employing 31.7% of the workforce. Bosnia and Herzegovina mainly produces raw materials such as steel, coal, iron ore, lead, zinc and aluminium. Additionally, wood is a significant sector and export commodity. Other important production sectors are mineral and chemical products, machinery, mechanical appliances, textile and footwear. However, the industry has been shrinking in the last decade due to the global financial crisis and the subsequent fall in both domestic and European demand. The overall value-added of the manufacturing sector is estimated at 12.8% of GDP (World Bank). The industrial output of Bosnia's Federation rose 10% in 2021, after shrinking by 5.9% one year earlier (data from the entity's statistical office). More specifically, industrial output rose by 13% in the manufacturing sector and by 8.4% in the utilities sector, and dropped by 8.2% in the mining sector.

Lastly, the service sector contributes 55.7% of GDP and more than half of total employment (50.3%). The most important service sector of the economy is trade, followed by business services, transport and construction. Tourism had been growing fast in recent years; nevertheless, the impact of the COVID-19-induced crisis was severe. In 2021, the sector has been recovering: a total of 497,474 foreign tourists visited Bosnia and Herzegovina last year, compared with 196,878 in 2020.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 18.0 31.7 50.3
Value Added (in % of GDP) 6.2 23.9 55.7
Value Added (Annual % Change) 4.1 -4.7 5.0

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
62,9/100
World Rank:
82
Regional Rank:
40

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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